60. The chemicals used for washing, the
chemical I have just given, hydrochloric acid, is a very powerful
chemical with potentially major environmentally damaging consequences.
What quantities would these operations need of such dangerous
chemicals in order to be able to perform this operation? Do you
have any idea? It may give us a line as to how to perhaps police
or trace these operations.
(Mr Palmer) Personally, I am not qualified to
give an opinion on that, but maybe some other colleague might.
(Mr Maxwell) We have with us Peter Barlow who
is our environmental and health and safety officer and perhaps
I could have your permission, Chairman, to point that question
to him.

Chairman

61. Of course.
(Mr Barlow) Whenever one is dealing with either
sulphuric acid, nitric acid or hydrofluoric acid in a case where
you wish to remove dyes and markers, then you are dealing with
sufficient quantities of a material to wash the product for it
to be a dangerous operation in any case, so there are health and
safety at work implications if one were doing it on a legitimate
basis. You then have problems of disposal of those materials anyway
and presumably they are not going to be disposed of in any way
other than to the ground, so it is an extremely dangerous process
both from the health and safety point of view and from the environmental
point of view. As to the quantities involved, well, you are probably
talking in terms of

Mr McWalter

62. Let's take, say, 10,000 gallons or whatever
it might be going on somewhere.
(Mr Barlow) You are probably talking in terms
of washing with a volume which would be concentrated at 5 per
cent of that 10,000 gallons being progressively used up and then
the residue of reduced activity having to be discarded.

63. So 500 gallons for that kind of quantity
of diesel?
(Mr Barlow) Yes.

64. It is clearly very traceable?
(Mr Barlow) That is right.

65. The other issue I wanted to raise was
the issue of price harmonisation which is your preferred option.
I cannot quite recall the figures from the Budget Red Book, but
I do not think that a total cost on the public exchequer of about
£7.5 billion would be much out of line if we were to try
to remove the fuel price escalator and instead try and get into
harmonisation with the Republic of Ireland, as this could be a
rather spectacular case of the tail wagging a very large dog.
Obviously these policies cause difficulties because we have a
different pollution problem in England than they have in the Republic
of Ireland and noxious fumes are much more significant here than
they are in the Republic of Ireland, so it is a different problem
and, hence, a different solution. Would you just suggest that
the Committee recommends to the Chancellor of the Exchequer that
we spend whatever the sum is, if it is £7.5 billion per annum,
that we spend £7.5 billion per annum addressing this issue
or do you have a more fine-grained way of addressing it?
(Mr Holloway) Yes, clearly pollution in Northern
Ireland is on a much smaller scale. In fact you could say that
pollution in Northern Ireland pollutes England or the west coast
of Scotland more than Northern Ireland, so I think your justification
would be a good one for actually addressing Northern Ireland in
a different way. The whole of Northern Ireland's retail market
products actually amount to 2.8 per cent of the UK's use and,
therefore, similarly the cost of solving this problem, whichever
route you take, is similarly small. I think we come back to the
principal point there that what we are talking about is a lasting
solution to prevent an illegal act continuing, and from the figures
that we would actually suggest are appropriate if we address harmonisation
of price, then we are not suggesting a criterion here that is
based on any distance from the border with the Irish Republic
because the smuggled product is available right across the Province
and, therefore, we would be suggesting that this concession or
rebate should be available right across the Province.

66. But only in Northern Ireland?
(Mr Holloway) But only in Northern Ireland.

67. And that being in defiance of the European
Regulations about not having differential rates of duty within
a single jurisdiction and also notwithstanding the fact that to
start treating Ireland as a single entity for these purposes would
inflame certain minorities within Northern Ireland itself. They
might be getting cheap fuel, but I am not sure they would wish
to get cheap fuel at the expense of increasingly seeing the island
of Ireland as a separate entity.
(Mr Holloway) I think we return to the political
will in order to address the problem and indeed it has been suggested
in the past that to actually have this considered and supported
by perhaps Customs & Excise, we would indeed have to have
the kind of political support to effectively harmonise prices
right across one island very clearly given before Customs &
Excise would consider this as an option.

68. And then have Customs' posts between
Northern Ireland and Scotland?
(Mr Holloway) Well, I think in a strange sort
of way, this actually sort of breaks into ground where you have
a problem on the west coast of Scotland very close to the problem
between the north and the south of Ireland, where you have a rural
community on the west coast of Scotland that is suffering from
the high price of retail motor fuel products, but what we are
talking about here is only Ireland, so I will stay with that.
However, if we think of our Customs & Excise addressing this
problem, at this precise moment in time they have to cover a 300-mile
border, they are not doing it effectively and we have lost a third
of the legitimate market since 1994. If they only had to focus
on the ports or the pinchpoints, the smuggling of petrol would
become impossible because of the Carriage by Sea act and then
they would only have to deal with gas oil or diesel which would
be very manageable, so we believe that a harmonisation effect
of prices, I accept the political distance that has to be covered
in order to actually convince those who may be of a mind that
it should not occur at this moment in time, but it would stop
considerable illegal practices eating into the very nature of
the businesses that support Northern Ireland. Northern Ireland
is essentially a rural community and most of the service stations
that we are talking about are not just a service station, but
they act as a shop, they are a bank, they are a meeting point,
they provide many other services and although we are not seeing
the effect in closures, we believe that some 48 or 50 perhaps
of the small sites closed in the whole of last year. You will
not see a gathering of momentum of closures for some time because
there is this effect of actually living off other legal activities
that make up the business because motor fuel is just a part, but
over time that will occur and once you have closed a filling station,
you have to fill the tanks with concrete slurry or a foam, so
you extinguish that service for ever. If that occurs to any great
extent in Northern Ireland, it will have a fundamental effect
on the rural community. You can similarly go across the border
into the Republic and look at what happened some years ago when
we had a price differential the other way and for a distance of
some ten miles across the Irish border, you would be hard-pushed
to find small filling stations other than at the border point
because of the things that happened ten or twelve years ago. So
we know we are not suggesting something that is easily acceptable
here, but we actually promote it as a very practical way of addressing
the problem. We are not promoting that it is actually a two-tiered
excise duty level within the UK, but it is the same excise duty
level and all that we are proposing is that there is a rebate,
short-term if it has to be described as such, to address a problem
where a part of the UK has the only land border with another European
Community country.

69. I am sure our Clerk has heard what you
have had to say and you would be very interested to know if our
Ulster Unionist Members would feel able to support such propositions.
I suppose if they did, it would go a long way to solving your
problem, but I would be not surprised if they felt unable so to
do.

Chairman

70. With spectacular serendipity, you have
pre-empted certain questions I was going to ask, although I will
suggest that we follow up afterwards in writing in the context
of any questions that Mr Murray suggested you would have extra
evidence on than he could have in case there is anything you want
to add. I do have one question with which to conclude. Which Ministers
in the Northern Ireland Office and in the Treasury declined to
see you?
(Mr Holloway) In the case of the Treasury, we
were regularly refused access by Dawn Primarolo and indeed only
gained access by going and standing in the lobby of the Treasury
until we saw her personal clerk. Adam Ingram refused access and
indeed Mo Mowlam refused access to the Petrol Retailers Association,
and Paul Murphy. We saw Annabel Jones at the Northern Ireland
Office only after months of sustained effort.
(Mr Murphy) Mo Mowlam saw fit to meet the National
Federation of Newsagents in Northern Ireland, but she did not
see fit to meet usare we deemed a smaller problem?

Chairman: Thank you
most warmly. I am conscious, as I said to Mr Murray, that this
has not been the easiest day to have such a session and we very
much appreciate your having come and the evidence you have given
us. Thank you very much indeed.